Last Updated on: 17th March 2023, 04:01 pm

Destruction of Corporate Audit Records – A Serious Federal Crime

Corporate audit records are crucial to ensure accountability, transparency, and compliance in the business world. Destroying such records is a serious federal crime that could lead to imprisonment and hefty fines. In this article, we’ll examine the legal implications of destroying corporate audit records, federal laws governing the same, and the possible defenses.

What Constitutes a Federal Crime of Destroying Corporate Audit Records?

Federal law strictly regulates the maintenance, review, and destruction of corporate audit records. The 18 U.S.C. § 1520 defines the federal crime of destroying corporate audit records as knowingly and willingly violating the laws regarding maintaining all corporate audits or reviewing paperwork for 5 years. In simpler terms, it is illegal to destroy evidence that could be relevant in a federal investigation, even if at a later time.

If you destroy corporate audit records, you could face serious legal consequences. Any allegation of destroying corporate records during a federal investigation or bankruptcy is a serious matter. If indicted for this federal offense, you could be facing large fines and even incarceration in federal prison. It’s, therefore, essential to understanding the legal implications of destroying corporate audit records and the legal recourse available to those facing such allegations.

The Sarbanes-Oxley Act

To bolster protections for shareholders, the Sarbanes-Oxley Act (SOX) was enacted in 2002. This act imposes strict standards on publicly traded corporations and the way these companies audit their records. Under Sarbanes-Oxley, an audit is defined as “examining financial statements of any issuer by an independent public accounting firm in accordance with the rules of the Board or the Commission … for expressing an opinion on such statements.”

In essence, this statute prohibits anyone from altering or destroying any record or tangible object with the intent to obstruct a federal investigation or hamper a bankruptcy proceeding. SOX substantially increased the penalties for knowingly and intentionally destroying and falsifying records during a federal investigation. If convicted in a federal court, you could be facing 20 years in prison and assessed a large fine.

Federal Audit Requirements

Pursuant to the Securities Exchange Act of 1934, those in charge of auditing corporate records must adhere to federal requirements under 15 U.S. Code § 78j-1. Auditors, both internal and external, must maintain these audit records for a specified period, typically 5 years. Failing to do so can result in federal criminal penalties.

Destroying Audit Records – A Federal Crime

Destroying corporate audit records violates 18 U.S. Code § 1520, which states that accountants who conduct an audit of an issuer of securities to which section 10A(a) of the Securities Exchange Act of 1934 applies must maintain all audit or review work papers for 5 years from the end of the fiscal period in which the audit was concluded. Anyone who knowingly and willfully violates this statute or any regulation by the Securities and Exchange Commission under subsection (a)(2) will be fined, imprisoned not more than 10 years, or both.

Other Federal Obstruction Crimes

Federal law covers a variety of other actions within 18 U.S. Code Chapter 73, including federal obstruction of justice crimes. These crimes are serious, and the law covers a wide range of actions, such as assault on a process server, resisting an extradition agent, obstruction of proceedings before departments, theft or altering a record or process; false bail, and more.

Defenses to Allegations of Destroying Audit Records

If you are under investigation, or already indicted, for destroying records, then you’ll need to mount an aggressive defense. The destruction of corporate audit records statute is violated when an auditor acts knowingly, willfully, and destroys audit records before the 5-year waiting period expires. For federal prosecutors to prove a violation of the statute, they must prove that you didn’t just destroy corporate audit records before the requisite period, but that you did so willingly and with the intent of destroying the records.

If you can make an argument that the destruction of records was not related to a federal investigation, it may help your case. The prosecutor must be able to prove you destroyed the documents while it was foreseeable a federal investigation would involve the document. This means the federal prosecutor must be able to prove, beyond a reasonable doubt, that an investigation would take place. If they can’t, then you could likely avoid a conviction.

Our law firm, the Spodek Law Group, and our attorney, Todd Spodek, are experienced federal criminal defense lawyers who can help protect your legal rights during an interrogation and negotiate with the prosecutor for a favorable outcome on the case. If the federal government suspects you’ve destroyed corporate audit records, you may wake up one day and discover the FBI at your doorstep, ready to arrest you on suspicion of obstructing justice in violation of the Sarbanes-Oxley Act and 18 U.S. Code § 1520.

These are very serious allegations, and in addition to possible prison time and fines, those accused will almost certainly face extreme difficulty finding future employment within their professional industry. It’s essential to retain a federal criminal defense lawyer who understands how federal prosecutors will attempt to build their case against you.

Why You Need an Experienced Federal Criminal Defense Lawyer

If you are facing federal charges for destroying corporate audit records, you must understand the legal implications and the possible defenses. You need an experienced federal criminal defense lawyer who can help you navigate through the legal system, protect your legal rights, and negotiate with the prosecutor for a favorable outcome.

At the Spodek Law Group, we understand that being accused of a federal crime can be a terrifying experience, and we’re here to help. Our team of experienced federal criminal defense lawyers has the necessary skills and expertise to build a strong defense and challenge the prosecutor’s case against you. We have a track record of success in defending clients facing federal charges and can provide you with the legal guidance and support you need during this challenging time.

What Sets Us Apart

At the Spodek Law Group, we’re committed to providing our clients with the highest level of legal representation. Here are some of the things that set us apart:

Experience – Our lead attorney, Todd Spodek, has years of experience defending clients facing federal charges. He’s earned a reputation as a tough negotiator and a skilled trial lawyer.

Results – We have a track record of success in defending clients facing federal charges. We’ve helped many clients avoid jail time and hefty fines, and we’ll do everything in our power to achieve the same for you.

Client-focused approach – We understand that every client’s case is unique, and we take a client-focused approach to legal representation. We’ll work closely with you to understand your needs and develop a legal strategy that best meets your objectives.

Contact Us Today for a Consultation

If you’re facing federal charges for destroying corporate audit records, it’s essential to seek legal representation immediately. The Spodek Law Group is here to help. We offer a free initial case review to assess your situation and provide you with the legal guidance and support you need. To schedule a consultation, call us, or fill out our contact form. We’re available 24/7 and can provide you with the legal assistance you need to protect your rights.